TaxTMI 
TaxTMI 
2022 (9) TMI 1427
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.... with the ECIR/MDSZO/21/2021 issued by the respondent and quash the same as illegal, unconstitutional, non est in the eye of law. (ii) Mr.R.V.Ashok Kumar, the petitioner in Writ Petition No.18209 of 2022 has approached this Court under Article 226 of the Constitution of India seeking for issuance of a Writ of Certiorarified Mandamus, calling for the entire records in connection with the summon No.PMLA/ SUMMON/CEZO2/2022/125 issued by the respondent dated 29.04.2022 in F.No.ECIR/MDSZO/21/2021 and quash the same as illegal, unconstitutional, non est in the eye of law and consequently declare the investigation in ECIR/MDSZO/21/2021 as illegal and unconstitutional. (iii) Mr.V.Senthil Balaji, the petitioner in Writ Petition No.18213 of 2022 has approached this Court under Article 226 of the Constitution of India seeking for issuance of a Writ of Certiorarified Mandamus, calling for the entire records in connection with the summon No.PMLA/ SUMMON/CEZO2/2022/126 issued by the respondent dated 29.04.2022 in F.No.ECIR/MDSZO/21/2021 and quash the same as illegal, unconstitutional, non est in the eye of law and consequently declare the investigation in ECIR/MDSZO/21/2021 as illegal and unco....
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....12.04.2019 before the Special Metropolitan Magistrate for trial of CCB and CBCID Cases, Egmore. Thereafter, the said C.C.No.8591 of 2019 was transferred to the Additional Special Court for Trial of Cases related to Members of Parliament and Members of Legislative Assembly of Tamil Nadu, Chennai and re-numbered as C.C.No.25 of 2021 on 07.04.2021, that was challenged by the petitioner and the de-facto complainant before the High Court in Criminal Original Petition No.13374 of 2021. Considering the facts and circumstances of the case that the de-facto complainant, accused and victims have jointly compromised the issue, the accused pleaded to the High Court to quash the entire proceedings, since the matter has been mutually and amicably settled among them. A supporting affidavit has also been filed by the de-facto complainant and 13 victims who were also arrayed as witnesses to the calendar case and the High Court, to secure the ends of justice, following the principles set out by the Apex Court in the judgment in State of Haryana and others v. Bhajan Lal and others, 1992 Supp (1) SCC 335, quashed the entire proceedings in C.C.No.25 of 2021 vide order dated 30.07.2021 passed in Crimina....
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....ditor appeared and furnished various documents, they were unable to proceed and it has been finally argued that when the proceedings in C.C.No.25 of 2021 were also quashed by this Court in Criminal Original Petition No.13374 of 2021 vide order dated 30.07.2021 and the proceedings in C.C.No.19 of 2020 have been stayed until further orders by this Court in Criminal Revision Case No.224 of 2021 vide order dated 18.04.2022 and the proceedings in C.C.No.24 of 2021 have also been stayed until further orders by this Court in Criminal Original Petition No.15122 of 2021 vide order dated 01.10.2021, there is no basis for proceeding against the petitioner under the Prevention of Money-laundering Act, because the Hon'ble Supreme Court in Vijay Madanlal Choudhary and others v. Union of India and others, 2022 (10) SCALE 577 has held that in the absence of proceeds of crime, the authorities under the Prevention of Money-laundering Act cannot step in or initiate any prosecution, therefore, the writ petition deserves to be allowed, by quashing the impugned proceedings. 3. Mr.Aryama Sundaram, learned Senior Counsel appearing for the petitioner in Writ Petition No.18209 of 2022 pleaded at the ou....
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..... When there is no predicate or scheduled offence against the petitioner and when the scheduled offence which becomes essential and fundamental to initiate proceedings under the Prevention of Money-laundering Act was quashed, consequently the proceedings under the Prevention of Money-laundering Act cannot survive, hence, the summon issued under Section 50 of the Prevention of Money-laundering Act is not legally sustainable, therefore the same is liable to be quashed. 4. Mr.Aryama Sundaram, placing reliance on a three-Judge Bench decision of the Apex Court in the case of Arun Kumar and others v. Union of India and others, (2007) 1 SCC 732, argued that a jurisdictional fact must exist before a Court assumes jurisdiction over a particular matter. If the jurisdictional fact does not exist, the Court, authority or officer cannot act. If a Court wrongly assumes the existence of such fact, the order can be questioned by a writ of certiorari, therefore, the underlying principle is that by erroneously assuming existence of such jurisdictional fact, no authority can confer upon itself jurisdiction which it otherwise does not possess. When three jurisdictional facts are missing in the cases ....
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....7 and 13(1) of the Prevention of Corruption Act. When the ECIR was registered on 29.07.2021, the Department did not have any material against the petitioner to bring him under the PMLA, because the Department itself has moved an application on 08.11.2021 seeking for production of First Information Reports etc. The request for furnishing unmarked documents were refused by the trial Court, as against which the respondent came to the High Court. The High Court in Criminal Original Petition Nos.5725 to 5727 of 2022 by order dated 30.03.2022 permitted the Enforcement Directorate to peruse the documents and take notes thereof. Aggrieved by this order, when one M.Karthikeyan (A3) in C.C.No.24 of 2021 filed a Special Leave Petition, this order was stayed by the Hon'ble Supreme Court in SLP(Crl.)(Diary) No.9957 of 2022 and the same is also pending in view of the stay granted by the Supreme Court. When the Hon'ble Supreme Court felt that there shall be tangible and credible evidence to proceed under the Prevention of Money-laundering Act, without there being any such evidence, the summons under Section 50 of the Act cannot be issued to the petitioner. Even the application dated 08.11....
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....is equally applicable to judicial, quasi-judicial and administrative proceedings also. 7. Mr.R.Sankaranarayanan, learned Additional Solicitor General appearing for the respondent argued that the present writ petitions are not maintainable, for the reason that they are highly premature, because, as per Section 50 of the Prevention of Money-laundering Act, the petitioners cannot be said to be aggrieved persons by mere issuance of summons. Since the CCB, Chennai had invoked the provisions which are scheduled offences as specified under paragraph-1 and paragraph-8 of Part-A of the Schedule appended to Prevention of Money-laundering Act, on a prima facie view that the petitioners had acquired proceeds of crime as defined under Section 3 of the Prevention of Money-laundering Act by commission of scheduled offence and subsequently layered/secreted the proceeds of crime and also projected the same as untainted, an Enforcement Case Information Report bearing No.ECIR/MDSZO/21/2021 dated 29.07.2021 was recorded by the respondent Department and thereafter investigation under the provisions of PMLA was initiated. As a part of investigation, the respondent Department, invoking Section 54(f) of ....
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....ral argued that the Hon'ble Apex Court also has held against the petitioners that the non-supply of ECIR copy in a given case cannot be faulted, because the ECIR cannot be equated with that of First Information Report that is mandatorily required as per the provisions of the 1973 Code. However, coming to the ratio laid down by the Apex Court in Vijay Madanlal Choudhary and others (supra), Mr.Sankaranarayanan fairly conceded that the Apex Court in paragraph 187(v)(d) has held that if the person is finally discharged/acquitted of the scheduled offence or the criminal case against him is quashed by the Court of competent jurisdiction, there can be no offence of money-laundering against him or any one claiming such property being the property linked to stated scheduled offence through him. Therefore, in the present cases, since the High Court in its order dated 30.07.2021 passed in Criminal Original Petition No.13374 of 2021 filed by one of the petitioners had quashed the proceedings in C.C.No.25 of 2021 on the file of the Additional Special Court for Trial of Cases related to Members of Parliament and Members of Legislative Assembly of Tamil Nadu, Chennai, the respondent Departmen....
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.... underlying offence in C.C.No.25 of 2021 has been quashed by this Hon'ble High Court in Criminal Original Petition No.13374 of 2021 on 30.07.2021, there are no proceeds of crime, yet to say the petitioner is an accused, is highly unfair and unlawful. Referring to para-18 and also para-31(iv) of the counter affidavit, Mr.Aryama Sundaram pleaded that the Prevention of Money-laundering Act has been used as a fishing expedition without any basis against the petitioner, as the Supreme Court has recently observed that there should be a reason to believe and some material should be there to suspect to believe. The respondent has informed the Court moving an application dated 08.11.2021 stating that there is no material, hence, they should be furnished with all the documents including unmarked documents, failing which their investigation against the petitioners will be paralysed. When the respondent does not have any material, they cannot collect any evidence under Section 50 of the Prevention of Money-laundering Act, especially, when Section 50 is an innocuous provision asking for the personal appearance which can only be for giving evidence. Referring to pages 21 & 22 of the counter ....
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....a link, therefore the summon issued under Section 50 is bad and has to be quashed, as it is colourable exercise of power and also violative of the petitioners' rights under Art.20(2). In the absence of any material, as per para 54 of the judgment of the Supreme Court in Vijay Madanlal Choudhary and others, they cannot step in under the Prevention of Money-laundering Act. Therefore, the ECIR proceedings themselves are without authority of law, especially, in the case of the petitioner, the underlying offence has been quashed. 11. Heard learned counsels appearing for the parties and perused the materials available on record. 12. The petitioners in all the writ petitions were issued with summons on various dates to appear before the respondent. It is also not disputed by the respondent that the petitioners have either appeared in person or through their authorised representatives. It is pertinent to note that the respondent initiated proceedings in F.No.ECIR/MDSZO/21/2021 pursuant to the First Information Reports in Crime Nos.298 of 2017, 441 of 2015, 344 of 2018, which have been assigned C.C.No.19 of 2020, C.C.No.24 of 2021 and C.C.No.25 of 2021 respectively. Mr.Sidharth Luthra....
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....ly discharged/acquitted of the scheduled offence or the criminal case against him is quashed by the Court of competent jurisdiction, there can be no offence of money-laundering against him or any one claiming such property being the property linked to stated scheduled offence through him." (emphasis supplied) 14. As stated supra, it is an admitted fact by the counsels appearing on either side that the proceedings in C.C.No.25 of 2021 have been quashed. The above legal position is no longer res integra, in the light of the judgment mentioned supra, therefore, agreeing to the said proposition, Mr.R.Sankaranarayanan, learned Additional Solicitor General has fairly conceded that the respondent Department would not proceed against the persons in C.C.No.25 of 2021. Accordingly, we record his statement that the respondent-department will not proceed against the persons in C.C.No.25 of 2021. But, however, learned Additional Solicitor General argued that the benefit of the order of quash cannot be extended to the orders of stay granted in two other cases, as they should come for inquiry responding to the summons issued under Section 50. He also submitted that the orders of stay granted b....
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....een stayed. As stated supra, since the ECIR itself was only on the basis of the said three First Information Reports, when the proceedings pursuant to the said First Information Reports have been stayed by the High Court, whether the ECIR, which is also pursuant to the First Information Reports, can be proceeded with, is a question that stares at open. Our considered answer is in the negative. 16. Because, it is not the case of the respondent that apart from the above three First Information Reports, there are other materials based upon which they have initiated the proceedings under the Prevention of Moneylaundering Act. Hence, in our view, when the calendar cases which culminated from the said two First Information Reports also have been stayed, the respondent Department should also refrain itself from proceeding any further, as it is their admitted case that the summons issued to the petitioners are pursuant to the initiation of ECIR based upon the three First Information Reports. 17. Learned Senior Counsels appearing for the petitioners in extenso argued that there is no jurisdictional facts to initiate the proceedings under the Prevention of Money-laundering Act. According t....
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....nfer upon itself jurisdiction which it otherwise does not possess. 75. In Halsbury's Laws of England, it has been stated: "Where the jurisdiction of a tribunal is dependent on the existence of a particular state of affairs, that state of affairs may be described as preliminary to, or collateral to the merits of, the issue. If, at the inception of an inquiry by an inferior tribunal, a challenge is made to its jurisdiction, the tribunal has to make up its mind whether to act or not and can give a ruling on the preliminary or collateral issue; but that ruling is not conclusive." 76. The existence of jurisdictional fact is thus sine qua non or condition precedent for the exercise of power by a court of limited jurisdiction." Further, the Apex Court in the case of State of Punjab v. Davinder Pal Singh Bhullar and others, (2011) 14 SCC 770, has held that if a foundation is being removed, structure/work falls. 20. A mere perusal of the above judgment clearly shows that the existence of jurisdictional fact is a condition precedent for the exercise of power by a Court of limited jurisdiction. Therefore, in the cases on hand, when there is no cause of action, since the proceeding....
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....d abide by the orders of stay. In this background, when the learned Additional Solicitor General appearing for the respondent fairly conceded that in view of the order of quash passed in Criminal Original Petition No.13374 of 2021 dated 30.07.2021, the respondent Department would not proceed against the accused therein, the same analogy would equally apply to the other cases, where orders of stay granted are operating against the C.C.No.19/2020 and C.C.No.20 of 2020 based on which the ECIRs are recorded and summons are issued till the cases are decided. Therefore, the impugned proceedings/summons do not have any legal sanctity. Interim order of stay granted will be subject to the final orders in the main proceedings, after which the eclipse would also wane away. In such circumstances, we are not inclined to enter upon the merits and demerits of the proceedings initiated by the Department, as it is at the stage of budding. It may either blossom into a full flower or wither away. Hence, we leave open all the questions that are raised on the merits and de-merits of the proceedings initiated by the respondent, to be dealt with in appropriate proceedings. 23. Generally, the summons are....